Dollar Edges Lower Ahead of Busy Week
The dollar fell against a basket of major currencies as investors kept their powder dry amid a lack of top tier economic data but losses were capped by growing expectations that the Federal Reserve will hike its benchmark rate at year-end.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.07% to 93.41.
In what was a quiet day on the economic calendar the greenback retreated from six-week highs as investors held off initiating large positions ahead of a busy week which includes a speech by Federal Reserve chair Janet Yellen slated for Wednesday.
Yellen will speak at the Community Banking in the 21st Century Conference on Wednesday amid growing speculation concerning her position as Fed chair. Fed Governor Jerome Powell and former Fed governor Kevin Warsh are reportedly on a shortlist of candidates to succeed Janet Yellen.
Losses in the greenback, however, were capped as investors remained optimism that the Federal Reserve will stick with its plan to hike rates in December.
Nearly 80% of traders expect the U.S. central bank to hike rate in December, compared to just 50% a month ago, according to investing.com’s Fed rate monitor tool.
A slump in the pound also supported dollar upside amid data showing the UK construction sector contracted for the first time since the immediate aftermath of the Brexit vote.
The headline reading on the Markit/CIPS UK construction PMI report fell to 48.1 last month from 51.1 in August.
The purchasing managers index (PMI) figures are given as a number between 0 and 100. Anything above 50 signals growth, while anything below indicates a contraction in activity.
GBP/USD fell to $1.3241, down 0.28%.